Look, admit it, we Brits all enjoy taking an occasional poke at the Yanks. Well, they're so damn big and they did push us off our global perch so we're entitled to take the occasional swing at them with our handbags even if the fact that they hardly notice is even more irritating! However, deep down we are rather fond of them and we'd rather have them running things on the block than anyone else. So, it is with genuine pleasure that I repeat A E-G's excellent news in today's Telegraph. In the 'Great War' between Saudi and America over the future of oil supplies, the Yanks are winning hands down! Those 'good ol' boy frackers' are fracking the pants of those Arabs!
Mr Tillerson [boss of Exxon Mobil] said shale producers are more agile than critics expected, which means that the price war will go on. "This is going to last for a while," he said, warning that any rallies are likely to prove false dawns.
The US "rig count" - suddenly the most-watched indicator in global energy - has fallen from 1,608 in October to 747 last week. Yet output has to continued to rise, stabilizing only over the past five weeks.
It was assumed, not least by the Saudis, that allowing middle east oil to flow freely would drive the price down to a level which would bankrupt the 'frackers' who were operating on huge amounts of borrowed money. Sorry, 'Ali Baba', but it ain't happenin'! The 'frackers' are going from strength to strength. The same thing happened with shale gas:
Mr Tillerson said this is more or less what happened in the sister market for US shale gas. In 2009, some 1,200 rigs produced 5.5bn cubic feet (bcf) of gas per day at a market price near $8.
Today the price is just $2.50. Nobody would have believed back then that the industry would continue boosting supply to 7.3 bcf, and be able to do so with just 280 rigs.
Oddly, and the irony is delicious, it is the Saudis who find themselves between an empty desert and an empty desert! In order to support their corrupt regime, keep the 'proles' happy and re-arm their military as war with Iran looms, they have been forced to dip into their (considerable) reserves which are shrinking rapidly.
Of course, no sunny day is complete without a shower of shit and so I must report that one of the biggest casualties in the global oil industry will be North Sea oil. In order to stop it collapsing entirely, the government - which ever government! - will have to slash taxes thus making an even bigger nonsense of their mendacious claims to spend money like a drunken sailor. Still, there's one ray of sunshine across the North Sea as the rigs slowly rust away, it could happen just we hand the lot of it over to the 'Scots Nuts' as a sort of farewell present. Well, they've been agitating for their 'fair share' for years so now they can have the lot and we can remind them that 100% of fuck all is, er, fuck all! Too, too delicious!
David, we don't mind a swing or two so long as it doesn't leave a mark. Also, the US frackers are fighting off the anti fracking agenda which is being partly financed by Russian oligarchs.
Posted by: Whitewall | Thursday, 23 April 2015 at 12:57
I meant to ask, is there a frackable amount of oil or gas within Britain?
Posted by: Whitewall | Thursday, 23 April 2015 at 13:32
It was assumed, not least by the Saudis, that allowing middle east oil to flow freely would drive the price down to a level which would bankrupt the 'frackers' who were operating on huge amounts of borrowed money.
No, it wasn't. Really, it wasn't. The Saudis simply maintained production (note: they didn't increase production) because it was in their economic interests to do so: had they shut in production they'd have endured lower revenues and not shifted the oil price one jot. The recent price collapse was demand driven, not supply driven.
The Saudis are not in any way in competition with US shale, because their fields are not marginal and Saudi oil doesn't go to US refineries. Venezuela and Nigeria are far more exposed.
Posted by: Tim Newman | Thursday, 23 April 2015 at 15:27
Posted by: JK | Thursday, 23 April 2015 at 22:19
I have always thought that oil was just where it is and those who can get it out should sell it to those who can afford it.
The Middle East should be an Oasis of wealth and the people all living in harmony drinking wine and reading the koran however the idiots are killing each other and the oil is still flowing. You have to admire the West. We are a canny bunch of robbers.
Posted by: jimmy glesga | Thursday, 23 April 2015 at 22:21
Jimmy, that is some fine usage of the English language. I plan to steal your comment, brazenly of course, and display it elsewhere tomorrow.
Posted by: Whitewall | Friday, 24 April 2015 at 03:03
Oh dear. From so far away it is all so fracking confusing.
:-)
Posted by: AussieD | Friday, 24 April 2015 at 08:37
Contrary to popular belief, we already have oilfields in England. One is quite close to our Host's abode; others are in Lincolnshire and Nth Lancs. Rumour contol has it there is much more to be pumped. This by conventional methods, add in fracking and the Duff Rolls will run for centuries!
Posted by: Backofanenvelope | Friday, 24 April 2015 at 10:30
BOE, we may yet have to address David as "His Lordship" when he becomes an oil baron?
Posted by: Whitewall | Friday, 24 April 2015 at 13:33
Baron Corporal Duff?
Posted by: backofanenvelope | Friday, 24 April 2015 at 15:50
Hmm, not quite the feel I had imagined.
Posted by: Whitewall | Friday, 24 April 2015 at 16:55
Judging by the noise coming out of my beloved Scotland, there are lots of fracking fields in Falkirk Stirling Cumbernauld Shotts Dumfries Galloway, to name but a few. But will they drill there? Lordy, they have gone insane.
I am sure jimmy can give a better report
Posted by: missred | Friday, 24 April 2015 at 18:43
"But will they drill there?"
http://www.rigzone.com/news/article.asp?a_id=136972
Posted by: JK | Friday, 24 April 2015 at 21:48
missred. The SNP are calling for a morotorium which means they would frack but not now as the election is upon us and they hope the Greens will take votes from Labour. Business and jobs usually win in the end so I think fracking will happen. Only the SNP can allow fracking as they have the powers.
Posted by: jimmy glesga | Friday, 24 April 2015 at 22:58
Tim, I find myself between a rock - you! - and a hard place - A E-G's article - which reads:
"The paradox of today's oil markets is that global spare capacity is down to half its historical average. The Saudis have their foot to the floor, boosting output by 660,000 b/d over the past month to 10.3m.
PIRA Energy estimates that Saudi spare capacity is falling to 1.7m b/d, a wafer-thin buffer for the world. The market is primed for a sudden spike in prices if anything goes wrong. It is more than ever at the mercy of geopolitical events.
One thing is for sure. If and when prices rebound, US shale is ready to sweep in with lightning speed to snatch yet more market share. Opec has met its match.
Please, darling, don't ask me to choose between you!
And as for the rest of you, what's all this about "Baron Cpl. Duff"? "Baron"? Moi! I will be Viscount Duff of Blogdom, it can only be a matter of time!
Posted by: David Duff | Saturday, 25 April 2015 at 10:16
Viscount Duff, thank you for the clarification. It helps.
Posted by: Whitewall | Saturday, 25 April 2015 at 12:38
And please bear in mind, all of you, that when it is bestowed the correct form of address will be 'the Right Honourable, the Viscount Duff of Blogdom'. Get it right or you will not be invited to my New Year's Ball to be held this year at Downton Abbey!
Posted by: David Duff | Saturday, 25 April 2015 at 13:40